Facebook and Jio take over India

Facebook and Jio take over India

Facebook is soon to be the largest minority shareholder in the telecommunication unit of Reliance Industries.

In a deal announced yesterday, Facebook is buying $5.7 billion worth of shares in Jio Platforms, part of the Reliance Industries conglomerate. Jio took over the Indian mobile network for the last four years since it launched. During this time, it gained more than 388 million users. It provides the means of streaming movies, shopping online, and read the news. When it launched, it slashed its competitors by giving customers six months of free 4G internet.

Analysts believe this is a smart move for Facebook because the Indian market is expanding. For the company, the Asian country is where the most prominent Facebook and WhatsApp users are. WhatsApp alone provides service for 340 million people. According to Bernstein, "The transaction fits with their recent push to build themselves and experiment more and provides a closed network of 388 million users ... to build and test a WeChat like app." And the number can keep on growing, as nearly 600 million people don’t have internet access yet, but the internet boom started.

Of course, the deal is not profitable from a social point of view, but also an economic one. The deal cut with Facebook will help Jio to bring its debt to zero by March 2021.

Facebook stated that it would focus on developing the relationship between WhatsApp and Reliance’s JioMart to facilitate the connection between businesses, shops, and people.

After the deal became public, shares of Reliance Industries Ltd. went up 0.68%, while Facebook gained 3% after-hours to $175.15.


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Sources: bbc.com, economictimes.indiatimes.com, livemint.com

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Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

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